Below you will find a brief description of the program of automatic information exchange:
According to the proposal made by the European Commission (EC), this program allows the exchange of information related to bank accounts among countries involved in the program, and which aims also to exchange data on dividends, capital gains and other financial income for 2013. It also seeks to increase the information on other types of income from January 1, 2015 such as: income from employment, directors´ fees, life insurance products, pension and real estate property.
It is important to remember that Mexico has already an information exchange agreement with the United States (US), the Foreign Account Tax Compliance Act (FATCA), by which both the Mexican government and the US exchange information of investors who receive income through their financial systems, i.e., the US Government automatically provides information to the Mexican Government on those tax resident investors in our country that maintain certain accounts or insurance policies opened or celebrated with financial institutions in the US.
This way Mexico is gradually implementing one of the Organization for Economic Co-operation and Development’s (OECD) recommendations on international collaboration and coordination to prevent tax evasion. On the other hand, it is desirable that the competent authorities also inform about the internal controls and security systems that have been developed and implemented to guarantee the integrity and protection of the exchanged information, since this is one of the main concerns among the taxpayers in the contracting countries; specially when such information involves amount of income and value of investments of individuals.
As always, the Tax & Legal Practice at KPMG in Mexico is at your service to analyze in detail the effects that this reform could have on your business operations.